About Currency Currents

With Currency Currents, you can stay tuned-in to our current global-macro view and our analysis of key investment themes driving currency prices.

We consistently focus on the key asset classes responsible for the flow of global capital -- including equities, fixed income, commodities and, of course, currencies.

Nothing is off limits to us in this free-wheeling look at the markets. Some days you’ll receive ramblings on trading psychology, while other days we may take an academic approach in explaining esoteric economic issues. Ultimately we have one goal in mind: to help you get a handle on the key investment themes driving global capital flow. Because if you know where the money is going, it increases the probability that your position in the market will be a profitable one.

Who is Jack the Pipper?

Jack is founder and president of Black Swan Capital LLC. He has also
operated a discretionary money management firm specializing in global
stock, bond, and currency asset management for retail clients. In
addition, he was general partner in a firm specializing in currency
futures and commodities trading. Neither firm is now in operation.

Prior to entering the investment arena, Jack worked in various
corporate finance positions. He has written extensively on the subject
of global currencies and international economics.

This week in Currency Currents we’ve discussed some details surrounding China and their ultimate influence on the global economy and investor sentiment. For good reason, everyone seems to pay close attention to China – they’re an economic leader.
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Global rebalancing is happening, like it or not. The question is: how will the global economy react when China becomes unhinged? That’s exactly what Jeremy Grantham is calling for; and he expects it could really take market players by surprise.
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Do stocks and currencies lead commodities? We think stocks are the best discounting mechanism we have. We think sooner or later the fundamentals of supply and demand are factored into prices.
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There’s one important chart I wanted to show you today. I’ll get to that in a minute. News wise, though, there’s nothing too exciting to talk about this morning; prices are little changed from where they finished yesterday … and the day before that.
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If we have learned one thing over the many years following markets it is this: If you are paying attention, there are always many more questions than answers. And if you are highly confident about future price action, you have either never traded real money or you haven’t a clue.
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Given that Australia has effectively become a satellite country of China–a country we are told is “booming” with growth–does the news item from Bloomberg this morning strike anyone else as a bit odd?
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We do our best to build alternative plausible scenarios that are in competition to our current trading positions; we say our best because we know by virtue of taking a position, the bias already exists.
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If you’ve followed the newsletter crowd much at all, many love to talk about the dollar, but few really risk their well-being trying to make money for real people trading it (it’s a beautiful thing being a guru with impunity).
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Above is the yield curve. Notice how far rates in the low-end (left side) of the curve have fallen. This is good for banks but likely bad for us who want to borrow and not too good for those who depend on deposits for income.
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The BRIC countries which include Brazil, Russia, India, and China are talked about as if they are some monolithic grouping that will carry the world out of the great depression we seem to be now mired.
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A key day reversal is defined by Stockcharts.com as “a one day chart pattern where prices sharply reverse during a trend. In an uptrend, prices open in new highs and then close below the previous day’s closing price.
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